personal finance for emergencies
Hi , i am wondering if you have thoughts on the question of debt v. emergency fund in a context where things get really bad (worse than they are now). I have about $8k out on a home equity line of credit at about 3.5%. I have enough in my emergency funds to pay this off. It would take me about 12 months to save that amount back up again. Since using YNAB i know/I believe that I won't go into debt again, so this is just about clearing the debt I brought with me.
Part of me thinks - just pay it off - if I actually do have an emergency in the next 12 mos, I can tap my HELOC. Another part thinks, maybe not? Are there emergencies that are *so* emergency that things like lines of credit get shut down? Should I keep my cash on hand in case of one of those? What are your thoughts?
Also, are there any other kinds of planning should I be doing around emergencies, other than emergency funds?
This is very timely for I’m going through this right now also. I’m building an addition, hence why the HELOC. I’ve used at least half of my Emergency funds to pay for part of the cost and was wondering if I should hold on to the last half of the cash and just use more of the Heloc.
This would mean I’m paying $105 (35k at 3.5%) of interest a month vs $59 (20k)